Saturday 7 February 2009 19.01 EST
First published on Saturday 7 February 2009 19.01 EST

Fadi Mustafa is a successful young PR executive. He has an office in Tel Aviv and another in the northern Israeli Arab town of Umm al-Fahm, where his family home is. He encourages other young Israeli Arabs to break through the glass ceiling of discrimination. He was what Israeli Arabs call a "straight back", in contrast to a previous generation - the "bent backs" who were bowed down by the experience of the creation of the Israeli state and the wars that followed.

He will look any Israeli in the eye as an equal, he insists, and shows me a painting that was given to him by the Israeli artist Menashe Kadishman.

But right now Fadi is an angry man, enraged by the rise of Avigdor Lieberman and his Yisrael Beiteinu (Israel Our Homeland) Party.

On Tuesday, if all the polls are right, Lieberman will emerge as the most significant beneficiary of an Israeli general election campaign played out against the bloody background of the three-week assault on Gaza in which more than 1,300 Palestinians died, many of them civilians.

The rightwing Likud party of Benyamin Netanyahu will probably emerge as the winner ahead of the Kadima party of Tzipi Livni. But most Israelis also recognise the wider significance of the moment: these elections are likely to mark the emergence of a far-right force, with a racist anti-Arab agenda, as the country's power broker.

If Lieberman has his way - and his party has surged ahead of Labour to push it to a humiliating fourth place - Umm al-Fahm may be transferred out of Israel into the Palestinian Authority, something its residents forcefully oppose in exchange for Israeli "villages", or settlements.

Its young people may be required to serve in the army, which they currently resist as they consider that army is fighting their own people in the Palestinian Territories. They would, all in all, be required to demonstrate - in Lieberman's own words - their loyalty to the state, both ordinary people and politicians, in exchange for citizenship.

But, even though his party is trailing Likud and the centre-right Kadimam, what Lieberman says matters. It is expected that a Netanyahu government would find a senior post for him, possibly as either defence or foreign minister. But his general influence is more important than any portfolio he might take.

Israel's fifth elections in a decade have been characterised by incoherent campaigning by most of the parties and muddied by the effect of the campaign in Gaza. Analysts believe that a large part of Lieberman's success is that his message - racist as it is - has come through clearest.

"Listen," said Mustafa, the PR executive, bitterly, "Who is Lieberman to say to me that I should be part of the West Bank? I speak Hebrew better than he does. I know Jewish culture better than he does. I got the highest score in Jewish history when I matriculated. I doubt he even studied Jewish history.

"I work together with Jews in Tel Aviv. We are the ones who are building the state together not him. It is not for Lieberman to say, 'You are a bad Arab and you are a good Arab. Who should stay and who should go. He will not decide who I am," he insists. "I will decide who he is."

It is not the first time that Umm al-Fahm has become a cause célèbre in Israeli politics. In 1984, the ultra-rightwing Kach organisation of the late Rabbi Meir Kahane - banned as a terrorist group - tried to rally here. Then both Jews and Arabs blocked it.

At the beginning of the second intifada in 2000, there were fatal riots here when the residents of the Ara valley, in which it sits, took to the streets. But the religiously conservative town is regarded by Israelis with suspicion for two other reasons.

Since the 1990s it has been a stronghold for the Northern Islamic Movement. Israelis claim, too, that prior to the construction of the separation wall, Umm al-Fahm was a point of infiltration for bombers from the West Bank. Now, however, it has become a symbol of Israel's growing attitude of harshness - not only to the Palestinians in the occupied territories, but also towards the Arabs in Israel itself. A symbol of the uneasiness of the relationship between Jews and Arabs within Israel.

On the Arab side, the tension focuses on the discriminatory treatment of Arabs over everything from jobs to economic opportunities, as well as anger over the treatment of Palestinians in the occupied territories.

For some on the Jewish side, it focuses on the twin ideas of a fear of an enemy within, combined with a more general anxiety about the demographics of a state where Jews might - in the not too distant future - become a minority.

Lieberman's discourse on loyalty and citizenship, as he defines it, has crept into other areas of the debate.

Last week, in response to Lieberman's proposals, Kadima leader Livni, running slightly behind Netanyahu, framed her own vision of the loyalty question in a speech to 100 local mayors. The speech differed only from Lieberman's in insisting that ultra-orthodox Haredi Jews - who are also largely exempted from the army - should also do military service.

But it is not only Umm al-Fahm, a pretty little town of mosques and steep streets that is lacking in the Israeli flags so visible elsewhere - which is in Lieberman's sights. It is Israeli Arab politicians, too. He believes that the parties should be banned from the Knesset (the courts disagreed). He has said they, too, should be dealt with like "other terrorists" and be tried for espionage or have their citizenship revoked.

Last week one of them was visiting the town: Ahmad Tibi, leader of nationalist Arab Ta'al Party. In the back of his car, as he toured, Tibi warned that Lieberman poses a threat not only to Arabs but also in his view to "Jews and Israel".

"The difference between Lieberman and [Austria's] Jörg Haider and Jean-Marie Le Pen, to whom he has been compared," said Tibi, "is that they were locals acting against immigrants. Lieberman is an immigrant acting against the locals. And while Umm al-Fahm is very much threatened, I think it is stronger than Lieberman. I think it is the Jewish majority that should be afraid of this phenomenon.'

Said Abu Shakr who runs Umm al-Fahm's art gallery, which tries to bring Arabs and Jews closer together, voices a similar warning. "Lieberman is bad for both Arabs and Jews. We have to worry about Israel in general."

While many Jewish voters disagree, there are some, still, who agree that the Lieberman phenomenon is a threat to all Israelis. Among them is Leon Deouell, a professor of psychology at the Hebrew University. Writing on the Yedioth Aharonot website Ynet last week, he said: "Yisrael Beiteinu openly calls for undermining the most basic rights in a democratic society, including the right to express and promote one's views. Without these rights, there is no democracy," he said. "This is a clear and present danger that no voter may ignore."